Accountability breeds innovation

It was the second of September of 2009. I was at the tail end of, at the time, was a rather lengthy commute of about 10 minutes (assuming all of the lights were green). After the usual barrage of annoying radio ads, we were at the top of the news hour. “Today the Obama Administration has approved a loan guarantee to Solyndra for the amount of $535 million dollars”: I was speechless. Not only because I was driving alone but, at the very notion that a startup company, being as risky of an investment as it is, could acquire such a loan from the United States government. And that’s ignoring for the moment that the US was deep in the worst recession since The Great Depression. Granted, if the cylindrical solar panel company were able to successfully offer clean energy to the masses, then just maybe it wouldn’t have been such a call, after all, everyone get’s plenty of sunlight: for free.

Then months went by. And being not far from the site of the new Solyndra building in Fremont, California, I had the privilege of seeing this monument being erected. But, even after the building was completed, very little was reported about their progress. Then in early 2011, the company filed for Chapter 11 bankruptcy protection. Obviously the failure was quite unfortunate, but the real travesty was that half a billion was fast-tracked into this highly risky venture with one key ingredient missing: accountability. Yes, accountability, which sadly is a foreign concept for some and viewed as a proverbial white elephant for others. With accountability: your neck is on the line — produce, or die. Without it — well then, as they say “anything goes”.

Let’s turn back the clock about ten years. The Month is October and K.R Sridhar of Bloom Energy had a meeting with John Doerr from the large venture capital firm Kleiner Perkins. It was this meeting that led to the green startup receiving more than $400 million of startup funding. For those who are not aware, Bloom Energy is the manufacturer of “Bloom Energy Servers” which process a variety of bio-mass energy sources to generate electricity. From the surface, this appears like a much more far-fetched idea than cylindrical solar panels, yet eBay has reported that Bloom Servers have saved the company $100,000 in electric bills since mid-2009. And just recently Apple has announced that they will be using Bloom Boxes for their new North Carolina Data Center.

So, what is it that makes The Bloom Box different from Solyndra, and what does this mean for the Saab bidding process? Aside from vast differences in the technologies themselves, a key difference: is the source of funding and its oversight. The funding for Solyndra was fast-tracked to delivery despite the explicit disapproval of a White House Budget Analyst. Whereas, the Bloom Box was funded by venture capitalists, who invariably have the incentive to ensure that the recipients of the money are held accountable. This is key, since so many venture capitalists in the Silicon Valley were burned by poor performing startups: accountability is now a requirement.

With Saab’s bankruptcy serving a massive blow to the economy of Trollhättan, and government officials facing newfound scrutiny as a select few are tasked with determining the fate of Saab: were are now down to the wire. The bankruptcy administrators are now being held personally responsible for their final decision of who gets to purchase Saab. This level of accountability is not to be taken lightly. Furthermore, once a Saab purchase has been completed, a group of key Saab staff members will spring into action — armed with all their skills, ingenuity and experiences from the past. That is something that the future owner of Saab will have to be prepared for, as the company prepares for a restart. The parallels that I draw between Bloom Energy and the Saab bidding process, isn’t necessarily intended to imply that NEVS is the best choice.

This is a question that continues to be hotly debated. But, what I ask for us to consider is that NEVS could very well turn out to be the choice that invariably leads to Saab’s comeback. This takes me to the final aspect of accountability, which leads to innovation. The instinctive response to accountability is fear. But, as an engineer, I can say from personal experience, that something magical happens when this accountability becomes transformed into a personal challenge. A challenge that inspires one to think outside of the box. Before you know it, fear fades away, and the engineers finds themselves feeling a sense of euphoria, as they overcome technical obstacles. Consider eXWD, for example. I can easily envision this working in rather exciting ways. Perhaps one could have multiple operation modes: “eco-sport” (where the engine has reduced power or is shut-off completely and power is provided solely by electricity to the back wheels), “dynamic-sport” (power is dynamically attenuated between front and back axels depending on slippage detection on each of the wheels to improve traction) or even a “speed-sense” mode where the engine is utilized more at speeds where gas mileage is optimal. As you can see adding electricity to the Saab powertrain opens the door to some truly exciting possibilities.

Whomever wins the bid, rest-assured that the ones building Saabs of the future will be the same talent that was behind cars that we know and love. Whether it be Saab veterans, and/or future apprentices thereof, if there is anyone that I have confidence in, to inject passion and ingenuity in the Saab cars of the future: it would be them.

Wow, what a dichotomy—-the prospects of Saab restarting as an electric car maker (“We’re GREEN man.”) and the well documented failure that was the taxpayer rathole of Solyndra. I find it absolutely incredible that “the consortium” would be blind enough to elect to use a name that is such a lightning rod for criticism. All they had to do was eliminate the “E” and they would have likely had the support of most of us—-even if their objective was still a future building electric cars. What a gallactic miscalculation—-that really shows how “green” they are in business/public image. “National Vehicles… Read more »

You are spot on, they have artificially limited themselves from the beginning and that shows they are wet behind the ears. I think they will just use the SAAB assets for other purposes, if NEVS win SAAB will effectively be dead.

I hate to read stories like this but a another dirty little secret is that thousands of over-produced special batteries for these type of cars are languishing away with a limited self-life in warehouses throughout the US! Fisker Automotive Could Be Another ‘Green’ Fiasco (from today’s Newsmax). Solar panel maker Solyndra made headlines when it declared bankruptcy last year after receiving $535 million in federal loans as part of the Obama administration’s efforts to promote alternative energy. Less publicized is the Obama administration’s loan of a nearly identical amount, $529 million, to Fisker Automotive to produce plug-in hybrid vehicles. And… Read more »

No coincidence where Joe Biden is from and where Fisker’s plans to produce these cars were—-the same state. That’s as clear as day for anyone who is open minded enough to understand it and accept it. I’m sorry—-there’s no reason why U.S. taxpayers were funding Fisker—-not even the prospect of that factory employing 2000—-when we all knew 200 would be closer to the truth. This wreaks of corruption. They were getting millions in U.S. loans—–to produce a $100,000 car in Finland? Frankly, we could do without the Department of Energy anyway. Now they still have their hands out and are… Read more »

What exactly are the implications of the administrators being “personally responsible”. It makes it sound as if the administrator will be personally liable if a new owner of SAAB ultimately fails. If their decision is based on appropriate due diligence, will they really have any personal liability if things don’t work out?

As a lawyer, I find this “personally responsible” idea to be utter nonsense. It certainly would be viewed as such in any US bankruptcy situation. When lawsuits are filed, there is an extraordinary amount of immunity that judges and the lawyers involved have. Plus, the law puts certain obligations in the lawyers to represent certain interests. Most lawyers who represent the bankrupt estate represent the interests of the creditors. I am not sure in Sweden how this process works but I would suspect that that administrators have a duty to pay off the creditors as best as they can and… Read more »

If you think about it, it’s sort of like making a parole board or a judge personally responsible for the actions of the person they release. Yes, some of us would love to see that accountability—-but it doesn’t usually happen that way. I don’t see how the Receivers can be personally responsible for anything that they don’t have direct control over once a decision is made. Still, I sure hope the money game favors Youngman over NEVS.

This big picture is it does not depend on who makes the electric car or no matter how good the quality is.The Fiskar Karma is made in Finland where my Viggen was masterfully crafted.

The product has to match demand and right now the Chevy Volt and Nissan Leaf are not in the game. You can’t legislate what to drive. This is why people in the USA like to drive SUVs, Crossovers and I even chose a 9-5 Combi to drive in comfort with performance and haul my stuff!

Nicely written, ryan, and a really interesting read, although I don`t understand why the administrators should be “personally responsible” – how long for, how much for? I am with 3cyl on this. You seem to be arguing the case for NEVS, albeit not strongly. But couldn`t M&M also develop, with great help from those SAAB engineers, eXWD too. They have considerable experience in a wide range of vehicle manufacture and now produce an EV within the group. They would still be my favourite, if they are still in the bidding, which seems not to be the case. But this Venture… Read more »

Indeed, my intent was not to argue whether NEVS would be the ideal situation but instead offer perspective as to what it really means if the administrators were to actually finalize a deal with NEVS. The stakes are high at this point and we are already beginning to see some fallout against Swedish Government officials, so this suggests to me that a bad decision on the part of the administrators will not be taken lightly. And you are correct that M&M could just as easily (and very likely will) pursue eXWD technology in future cars.

I’m not sure that the admins would have run this article if they realized the heavy political subtext. I’m Canadian, so not as heavily invested in this, but here’s a primer for our non-American friends: Solyndra was one of many “Green Economy” investments made by the US government at the beginning of the current economic meltdown. These investments have done well for the US overall but, as one would expect with any investment portfolio, some investments did not. Solyndra was the largest such failure, and so has become a conservative (aka Republican) talking point, meant to symbolize the “fact” that… Read more »

Automotive industries are so large, and effect the economies of so many different countries, and involve so many political decisions, that politics are going to be part of the equation, no matter what. Personally I think political discussions really belong in an automotive blog. You can’t really discuss the automotive industry in a vacuum that does not exist. Yeah Solindra was a failure. But as you say, the US bailout of the auto industry has been a huge success. Win some. Loose some. I think far worse than the decision to support Solindra was the bailout of the “too big… Read more »

Bernard: Ford recovered beautifully without the same bailout that GM got. And European FIAT would have helped Chrysler reinvigorate—-as that plan was already in progress before Chrysler was gifted with the “loans.” Some of us are still of the opinion that Government “help” was uncalled for—picking winners should not be the responsibility of the government, at least not in America. The Solyndra “talking point” is a great one. Half a billion dollars was flushed down the toilet, making a couple people very rich at the expense of U.S. taxpayers like me. They are not the only ones either—-do some research… Read more »

Yeah, but auto manufacturers make a useable product (the real economy). Bank’s don’t. I agree that the government should not pick winners and losers, but we only had three automakers. Ford actually foresaw the crisis and heavily borrowed before the crisis came, so it didn’t need to borrow any more from the government. Much of that borrowing was from the Ford family who loaned it to Ford so they could keep control of enough voting shares to run the company. Most of the other loans Ford got were from too big to fail banks which got bailed out; so you… Read more »

David, some good points, but: Ford was also in the initial group (who flew private jets to Washington, DC) to ask for loans. A few opportunistic lawmakers (narcicissists that they are) capitalized on it by crying outrage that the auto executives flew from Detroit to Washington, DC instead of driving. Of course, on the next visit, I think GM drove cars—–towing the line to try to look responsible. I’m not sure about Chrysler—-if they flew commercial or also drove cars (ridiculous since they already own jets and have pilots on retainer to fly them). I digress. Anyway, Ford bailed out… Read more »

Solyndra is indeed a hot-button issue in American politics. But, I don’t use it as an example for that reason, but merely by the virtue that so many people are aware of it. And it provides and interesting contrast against Bloom Energy, which has been showing some significant strides with their work.

I am not sure about the rest of you, but from reading between the lines, these last few weeks. If NEVS trully wanted to restart SAAB as a whole, they would have been interested in every piece of SAAB- parts, tools and the whole kit and kaboodle. It’s kind of like if Levi Strauss was in bankruptcy and a bidder for the estate didn’t want the zipper and button factory, how in the world can you make jeans without zippers and buttons? NEVS has never produced a car or for the matter, they haven’t made anything slightly automotive related. NEVS… Read more »

Yes Aero1, This is indeed a concern. But, the fact that we haven’t heard a finalized deal just yet, and Youngman appears to be reentering the stage, once again, NEVS will likely have to step up their game to win the bid.

All in all, I refuse to make blanket statements about the success of any particular bidder resulting in “the end of Saab”.

The real reason for Solyndra’s fall is not lack-of-accountability but the fact that solar tech itself is crap!! It is massively energy-inefficient, cost-intensive and not-compact taking up huge real-estate!!. NEVS is an electric-focussed startup. Nothing to do with solar power! And Ryan to be more honest NEVS (assuming they get Saab) will have access to – Saab’s engineering capabilities – Saab’s design competencies (incl. the people that designed the aero-x) – Saab’s manufacturing plants – Lithium supply chain thru the consortium – Battery tech thru the consortium – Saab’s biopower tech thru the 9-3 biopower, Aero-X E100 tech I think… Read more »

We all know that Youngman/Mahindra will have difficulty getting GM approval if they wish to build the previous models of 9-3, 9-5 etc as GM is present in both the chinese and indian markets.Thats why saab tooling has taken a back seat.

Also, no one knows what new models youngman/mahindra may build. So why would you know what models NEVS will build?

I don’t know and did not claim to. I look at NEVS and what they say, they are a recently formed off shore consortium without any previous significant experience in car production. In their own words they are interested in some of the SAAB assets, there is no indication they will continue the SAAB brand or become a manufacturer of SAAB cars. I simply do not think they are interested in becoming a primary car manufacturer. Do you really think NEVS will be producing SAAB cars in the future? I think it is much more likely they will look to… Read more »

I never made the claim that there was a technological connection between Solyndra and NEVS. I’m not sure how that could have been inferred.

I merely used Solyndra as an example of a failed green-energy promoting startup that was due largely as a result of insufficient oversight. But yes, I agree that this is not the *only* reason why they have failed, but It is a big one.

I suppose one part of accountability is having access to what you need. Let’s say for some reason Youngman gets the bid and will not get a GM license (highly probable). And they also want to build right away and Phoenix is too far off.

Is there any other European platform that Youngman could immediately get its hands on (get a license to build) which Saab could quickly tweak and produce? Maybe that is what Youngman is thinking.

Wouldn’t there be a Peugeot or Renault product that might work? Of course, recently, GM stuck their big nose in France too—and since they want Saab buried with no chance of a resurrection, to the best of their ability, they’d try to block any Peugeot deal with Youngman-Saab too. But hopefully the French government might thumb their nose at GM if any such nonsense occurred. I think Peugeot would welcome the chance to make some money on a venture like this—and their cars have been fundamentally pretty good—and if Saab engineers had a crack at improving all aspects, undoubtedly they… Read more »

This is an interesting question: Are there any other platforms available that Youngman could immediately build upon. It will most probably take a coalition to build the next SAAB automobile. It was done with the 9000 and most recently an engine was sourced from BMW. In any event, I am looking forward to SAAB cars being produced again.

Yes, that is a good question. Just how good or bad is the youngman-lotus lineup, especially their SUV concept? I am sure the electronic architecture is on sub par when compared to current ones in other European or us brands as well as many other areas. But still there must be tooling for a lot of Body in White. Saab must have some as well from the OG 9-3 pre-03 (i.e even hatch), no ? Of course that could only sell in some markets, but still. Bring some face-lifted hatches with modern ECUs =) I would buy it (but then… Read more »

Thanks for the info on the valley startups, i didnt know that.Then there has to be a lot of brave souls out there if you look at all the startups and their ideas 😉

OT but I was on a meeting where they presented humans ability to grasp future events. According to them we are capable of grasp and really feel situation awareness of approx 2 hours into the future….haha..then all the talk about future eco pollution and disasters are very hard to really (other than conceptually) understand what it means for your biz.

Ok thanks, didnt know that neither. But i hear that they start to think of automotive as the next hot thing in silicon valley. I guess the “big data” and “cloud” goes well with cars in the future when embedded devices increases and they gets connected.Would love to do nodejs on a embedded device for heavy I/O stuff =)

I also think thinks like TI DMD (MEMS technology) can have a great future for LED/Lasers and projection applications in the cars.

Yup. The “change is bad” crowd are out in force with their torches and pitchforks. Electric doesn’t necessarily spell “green” but it’s easy to politicise this thing if you jump on that agenda. Maybe – just maybe – there are people out there who think we should try and improve on the technology of today, whilst keeping an eye on the past.

Interesting times: for the administrators – flock the dead horse for as much cash as possible for concurrent creditors, even if that means something as NEVS. So what about all the previous suitors during the hey day of the GM saga: Merbanco anyone? Benny Ecclestone and his group etc etc? So how does a 60-year plus company get flocked to the highest bidder whose key competencies and core business is not auto manufacturing? Just to get your hands on the money to pay creditors? Since when was the Swedish Gov interested in altering the automotive landscape to know favor this… Read more »

Another case of someone spouting off about Solyndra without understanding the real reason it failed… government distortion of the silicon market, (and not the US government). Rising silicon prices were driving up the cost of traditional solar panels & one of the benefits of Solyndra’s is they are based on a different materials. But the Chinese government didn’t like the high prices of silicon as it was having adverse affects on its own domestic solar panel industry & worked to drive down the prices by increasing the supply, and hence drove down the price of silicon dramatically. And by the… Read more »

It’s a tough and competitive world. If you can’t run with the big dogs, stay on the porch. If you’re a U.S. company accepting half a billion dollars from taxpayers, understand the business climate and adjust. If you’re saying that China is going to use their economic might to sqaush green energy start-ups in the U.S.—-here’s and idea: Let’s drill for oil, natural gas, oil/shale and become the world leaders in nuclear power and let’s forget the wind and solar charade. We’ll let China have at it—-solar is one of the most inefficient ways of generating the energy we need… Read more »

Saab as it is now, is à perfect investment opportunity as of following reasons; – A reborn Saab has no debt! – No over staffed operations. – No costly or hidden obligations to past, workers, customers or suppliers. – It has technology that cab sold on the world market – It is well situated in a worldclass automotive hub for r&d. – It has access to manufactor transportation products from just a few hundred to 200 000 pieces. Maybe the auto industry is shifting it’s foundation, maybe batterymakers and worldclass suppliers of automobile technology is shaping how cars are created.… Read more »

Battery makers may eventually all have to go to China, because all modern batteries have rare earth elements and China now has a monopoly on rare earths. This is another reason why batteries are not such a good idea if you are not a Chinese company. But I do think Saab’s forte is being a “skunkworks (name given to aerospace company — Lockheed or Mc Donald [can’t remember which one] — that produced really unusual aerospace solutions).” I have come to think of Saab as GM’s skunkworks. So even as a supplier it could continue to make its mark in… Read more »

If “new” Saab think conventional engine and design just for a minute it won’t work…. This is the silver bullet, where it is do or die, if it comes down to awesome Saab innovations all wrapped up in quirky shapes, with ‘less is more’ interiors inspired by the best of scandinavian design…. This will work!

I think folks are getting distracted by my use of Solyndra as an example. But, some interesting points are being made. I just wish that folks weren’t so conclusive about NEVS. The fact is, there is a lot that we don’t know about them.

Governments make strategic investments in industries that are important to them; with very mixed results. I’m not sure why this is a shock. This is historically true (in the US) with most, if not all major industries: mining (very cheap mining claim grants), oil/gas (huge tax subsidies), farming (huge tax subsidies/price guarantees) autos (auto bailout), railroads (land grants), aerospace (NASA grants, FAA supports, infrastructure subsidies, government purchases) and the internet (created by gov’t and provided free access to entrepreneurs). In perhaps every one of those cases, private business have gone bankrupt/folded even with significant government support (pets.com anyone??). I live… Read more »

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